Exhibit 99.1
PSB ANNOUNCES 2ND QUARTER EARNINGS OF $.45 PER SHARE
Wausau, Wisconsin - David K. Kopperud, President of PSB Holdings, Inc. ("PSB")
and Peoples State Bank ("Peoples") today announced the Bank's financial results
for the second quarter of 2004.
"PSB earned $.45 per share this quarter compared to $.60 during the second
quarter last year. In addition, on June 28, the Bank opened its new home office
and financial center on Stewart Avenue in Wausau, Wisconsin," said Kopperud.
"However, abandonment of the old main office located on the same property
generated a cumulative one-time charge to operations of $199,000 after tax
benefits during the quarter. This contributed to a decline in earnings per
share. Prior to the abandonment charge, earnings were $.56 per share."
"Despite a slow-down in mortgage refinancing in 2004, the Bank continues to be
a leader in residential mortgage lending in our principal market of Marathon
County, Wisconsin" continued Kopperud. "During May 2004, despite more than 25
active competitors in this market, Peoples originated 1 of every 10 mortgage
loans closed. We are also pleased our new Minocqua office is growing ahead of
expectations and our new Weston branch on the Ministry/Marshfield Clinic health
care campus is under construction to be open later this year."
Kopperud further noted "Although Peoples is in transition to accommodate future
expansion through further capital and staffing investment, we are optimistic
about the prospects of continued strong economic growth in Wausau and our other
communities. Our optimism is expressed in a $.30 dividend per share paid today
to shareholders of record on July 8. As a result of the January 2004 5% stock
dividend, this is, in effect, a 5% increase over the dividend of $.30 per share
paid this time last year."
PSB Holdings, Inc. (OTCBB:PSBQ.OB), is the parent company of Peoples. Peoples
is headquartered in Wausau, Wisconsin with eight retail locations serving north
central Wisconsin in Marathon, Oneida, and Vilas counties. In addition to
traditional retail and commercial loan and deposit products, the Bank provides
retail investments, commercial property and casualty insurance services,
retirement planning and long-term fixed rate residential mortgages. All per
share information has been restated to reflect the 5% stock dividend paid in
January.
ASSET GROWTH AND NET INTEREST INCOME
PSB continues to have strong asset growth, increasing $51.2 million, or 13.5%
to $431.2 million since June 2003. Nearly all of this growth has been in the
loan portfolio which increased $50.2 million or 18.0% during the past 12
months. Loan growth was in mortgage lending with both commercial real estate
and on balance sheet residential real estate growing $29.4 million, and $19.4
million, respectively.
In addition to growth, credit quality improved and remains strong.
Nonperforming loans (including non-accrual and restructured loans) to gross
loans was .98% at June 2004 compared to 1.17% at March 2004, and 1.06% at June
2003. The Company also tracks delinquencies on a contractual basis quarter to
quarter since some problem loans currently making payments remain on non-
accrual status until ongoing ability to repay according to the contract is
shown. Loans contractually delinquent 30 days or more as a percentage of gross
loans were .84% at June 2004 compared to .88% at March 2004, and 1.01% at June
2003. The allowance for loan losses was 1.19% of gross loans at June 2004
compared to 1.26% at June 2003.
Asset growth continues to be funded primarily by borrowings and wholesale funds
including brokered certificates of deposits, as retail deposit growth has
lagged behind loan growth. During the past 12 months, FHLB borrowings and
wholesale certificates increased $29.9 million. Retail certificates with
balances greater than $100,000 increased $9.3 million, but other core deposits
and retail certificates increased just $6.4 million. During the past quarter,
wholesale funds increased $17.5 million, partially offset by a reduction in
overnight borrowings of $11 million. Retail and local deposits continue to
comprise the bulk of asset funding and were 69.3% of total funding at June 2004
compared to 74.7% of funding at June 2003.
Tax-adjusted net interest income increased $264,000, or 7.8% from $3,396,000
for the quarter ended June 30, 2003 to $3,660,000 for the current quarter ended
June 30, 2004 due to increased earning assets held, although margin on earning
assets for the quarter declined from 3.83% to 3.64%. Earning asset yields
have decreased 50 basis points from 6.07% at June 2003 to 5.57% at June 2004.
However, the cost of liabilities declined only 46 basis points from 2.73% at
June 2003 to 2.27% at June 2004.
During the quarter ended June 2004, net interest margin declined to 3.64% from
3.73% for the prior March 2004 quarter as overnight funds of approximately $11
million used to fund March 2004 loan growth were converted to long term fixed
funding during the June quarter. However, during the past 3 quarters, loan and
other asset yields have leveled and favorable repricing of time deposits has
slowed indicating net interest margin in the upcoming quarter will be primarily
impacted by the ability to control core deposit rate increases while
originating higher yielding loans in light of the recent 1/4% increase in the
federal funds rate. The Company's balance sheet remains neutral to interest
rate changes with net interest income for the next 12 months projected to
decrease $62,000 if rates increase 200 basis points, and would decrease $95,000
if interest rates decrease 100 basis points.
SERVICE FEE AND NONINTEREST INCOME
Noninterest income increased by $129,000 in the June 2004 quarter to $855,000
compared to $726,000 in 2003. However, the prior year June 2003 quarter
included a cumulative change in accounting estimate related to mortgage
servicing that lowered noninterest income by $236,000. After accounting for
the prior year adjustment, the decline in June 2004 income of $107,000 is due
primarily to lower mortgage banking income of $144,000. A valuation allowance
on mortgage servicing rights continues to be maintained and was $138,000 as of
June 30, 2004. As mortgage interest rates increase, this valuation allowance
is expected to be taken back into income as customers are less likely to
refinance their existing mortgages. During the June 2004 quarter, $12,000 of
the valuation allowance was recaptured. For all of 2004, the Company expects
mortgage banking income to be approximately 50% to 60% of the level seen during
2003. The Company serviced $156.1 million of mortgage principal for other
investors at June 30, 2004 compared to $137.5 million at June 30, 2003.
Peoples Insurance Services LLC, a commercial property and casualty insurance
agency and brokerage started by Peoples during September 2003, continues to
build relationships in the Wausau area. The agency's net loss during the
quarter and six months ended June 2004 was $37,000 and $75,000, respectively.
Since opening during September 2003, cumulative net losses have been in line
with initial projections despite lower than expected revenue growth.
OPERATING EXPENSES
Noninterest operating expenses increased $694,000 to $2,914,000 in the quarter
ended June 2004 compared to $2,220,000 during the quarter ended June 2003, but
included a one-time charge for abandonment of premises and equipment (the prior
home office on the same property as the new home office and principal banking
center was abandoned on June 28) of $329,000 before tax benefits. Excluding
this one-time charge operating expenses increased $365,000, or 16.4%.
As the new home office and principal customer financial center was occupied on
June 28, the 32,000 square foot $4.8 million dollar facility (including
furniture and equipment) was placed in service. Depreciation of the investment
in the new facility, along with the depreciation costs of the new Minocqua
branch and the item processing imaging system increased occupancy expenses for
the quarter by approximately $30,000. Annual depreciation expense is estimated
to increase $186,000 ($113,000 after income tax benefits) from the new
investment in the home office.
Excluding the one-time charge for abandonment of premises and equipment,
operating expenses as a percent of average assets were 2.43% during the June
2004 quarter compared to 2.40% during the June 2003 quarter. Also excluding
this charge, the expense efficiency ratio was 57.25% during June 2004 compared
to 53.86% in June 2003.
FORWARD LOOKING STATEMENTS
Certain matters discussed in this news release, including those relating to the
growth of the Company, its profits, and future interest rates, are forward-
looking statements and are made pursuant to the safe harbor provisions of the
Securities Reform Act of 1995. Such statements involve risks and uncertainties
which may cause results to differ materially from those set forth in this
release. Among other things, these risks and uncertainties include the
strength of the economy, the effects of government policies, including, in
particular, interest rate policies, and other risks and assumptions described
under "Cautionary Statement Regarding Forward Looking Information" in Item 1 of
the company's Form 10-K for the year ended December 31, 2003. The Company
assumes no obligation to update or supplement forward-looking statements that
become untrue because of subsequent events.
(tables follow)
PSB HOLDINGS, INC.
QUARTERLY FINANCIAL SUMMARY
(dollars in thousands, except per share data)
Quarter ended - Unaudited
JUNE 30, March 31, Dec. 31 Sept. 30, June 30,
EARNINGS AND DIVIDENDS: 2004 2004 2003 2003 2003
Net income $ 782 $ 954 $ 1,290 $ 1,235 $ 1,057
Basic earnings per share (3) $ 0.45 $ 0.55 $ 0.74 $ 0.71 $ 0.61
Diluted earnings per share (3) $ 0.45 $ 0.55 $ 0.74 $ 0.71 $ 0.60
Dividends declared per share (3) $ 0.30 $ - $ 0.29 $ - $ 0.29
Net book value per share $ 18.68 $ 19.33 $ 18.54 $ 18.11 $ 17.74
Semi-annual dividend payout ratio 29.84% N/A 19.88% N/A 21.74%
Average common shares outstanding 1,729,322 1,733,531 1,733,398 1,733,828 1,744,199
BALANCE SHEET - AVERAGE BALANCES:
Loans receivable, net of allowances $320,471 $307,109 $302,491 $288,448 $265,863
Total assets $426,826 $407,577 $399,351 $389,267 $371,537
Deposits $330,337 $312,455 $312,376 $307,752 $292,698
Stockholders' equity $ 32,942 $ 32,878 $ 32,095 $ 31,085 $ 30,670
PERFORMANCE RATIOS:
Return on average assets (1) 0.73% 0.94% 1.28% 1.26% 1.14%
Return on avg. stockholders' equity (1) 9.52% 11.64% 15.95% 15.76% 13.82%
Average tangible stockholders' equity to
average assets 7.61% 7.83% 7.85% 7.70% 7.92%
Net loan charge-offs to average loans 0.01% 0.02% 0.09% 0.02% 0.01%
Nonperforming loans to gross loans 0.98% 1.17% 1.08% 1.09% 1.06%
Allowance for loan loss to gross loans 1.19% 1.16% 1.15% 1.23% 1.26%
Net interest rate margin (1)(2) 3.64% 3.73% 3.65% 3.67% 3.83%
Net interest rate spread (1)(2) 3.30% 3.38% 3.24% 3.21% 3.34%
Service fee revenue as a percent of
average demand deposits (1) 2.63% 2.60% 2.70% 2.48% 2.83%
Noninterest income as a percent
of gross revenue 13.54% 12.24% 17.56% 17.90% 12.13%
Efficiency ratio (2) 64.54% 59.73% 53.47% 50.94% 53.86%
Noninterest expenses to avg. assets (1) 2.74% 2.56% 2.46% 2.38% 2.40%
STOCK PRICE INFORMATION:
High $ 35.60 $ 35.60 $ 36.19 $ 32.61 $ 32.38
Low $ 34.50 $ 33.50 $ 31.43 $ 31.43 $ 28.57
Market value at quarter-end $ 34.50 $ 35.00 $ 33.62 $ 31.90 $ 31.67
<FN>
(1) Annualized
(2) The yield on tax-exempt loans and securities is computed on a tax
equivalent basis.
(3) Due to rounding, cumulative quarterly per share performance may not equal
annual per share totals.
PSB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
(dollars in thousands, June 30, June 30,
except per share data - unaudited) 2004 2003 2004 2003
Interest income:
Interest and fees on loans $ 4,714 $ 4,476 $ 9,268 $ 8,872
Interest on securities:
Taxable 453 501 914 1,116
Tax-exempt 245 221 488 444
Other interest and dividends 46 60 92 119
Total interest income 5,458 5,258 10,762 10,551
Interest expense:
Deposits 1,360 1,432 2,651 2,944
FHLB advances 504 506 970 1,014
Other borrowings 77 52 150 93
Total interest expense 1,941 1,990 3,771 4,051
Net interest income 3,517 3,268 6,991 6,500
Provision for loan losses 240 240 480 465
Net interest income after provision for loan losses 3,277 3,028 6,511 6,035
Noninterest income:
Service fees 322 325 613 628
Mortgage banking 308 216 468 844
Investment and insurance sales commissions 90 89 181 188
Net gain on sale of securities - - 111 -
Other noninterest income 135 96 222 188
Total noninterest income 855 726 1,595 1,848
Noninterest expense:
Salaries and employee benefits 1,547 1,387 3,095 2,835
Occupancy and facilities 361 285 662 573
Loss on abandonment of premises and equip. 329 - 329 -
Data processing and other office operations 187 148 347 287
Advertising and promotion 64 51 98 88
Other noninterest expenses 426 349 985 754
Total noninterest expense 2,914 2,220 5,516 4,537
Income before provision for income taxes 1,218 1,534 2,590 3,346
Provision for income taxes 436 477 854 1,065
Net income $ 782 $ 1,057 $ 1,736 $ 2,281
Basic earnings per share $ 0.45 $ 0.61 $ 1.00 $ 1.31
Diluted earnings per share $ 0.45 $ 0.60 $ 0.99 $ 1.30
PSB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2004 unaudited, December 31, 2003 derived from audited financial
statements
JUNE 30, December 31,
(dollars in thousands, except per share data) 2004 2003
ASSETS
Cash and due from banks $ 15,147 $ 13,754
Interest-bearing deposits and money market funds 2,365 1,214
Federal funds sold - 3,959
Cash and cash equivalents 17,512 18,927
Securities available for sale (at fair value) 71,461 72,472
Federal Home Loan Bank stock (at cost) 2,792 2,444
Loans held for sale - 207
Loans receivable, net of allowance for loan losses of $3,906
and $3,536, respectively 325,320 304,339
Accrued interest receivable 1,724 1,617
Foreclosed assets 46 84
Premises and equipment 10,495 7,557
Mortgage servicing rights, net 803 814
Other assets 1,063 472
TOTAL ASSETS $431,216 $408,933
LIABILITIES
Non-interest-bearing deposits $ 46,901 $ 50,563
Interest-bearing deposits 293,375 265,851
Total deposits 340,276 316,414
Federal Home Loan Bank advances 47,000 47,000
Other borrowings 9,394 10,475
Accrued expenses and other liabilities 2,307 2,903
Total liabilities 398,977 376,792
STOCKHOLDERS' EQUITY
Common stock - no par value with a stated value of $1 per share:
Authorized - 3,000,000 shares
Issued - 1,887,179 shares 1,887 1,887
Additional paid-in capital 9,694 9,694
Retained earnings 24,007 22,789
Accumulated other comprehensive income (4) 844
Treasury stock, at cost - 161,549 and 153,781 shares, respectively (3,345) (3,073)
Total stockholders' equity 32,239 32,141
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $431,216 $408,933